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US CPI Price: Forecasts from seven large banks, still at the top of the Fed’s target

On Tuesday, November 14 at 13:30 GMT, the US Bureau of Labor Statistics (BLS) will publish figures for the Consumer Price Index (CPI), the most important measure of inflation. As we approach publication time, here are the forecasts from economists and researchers at seven major banks for the next US inflation figure for the month of October.

The general CPI will stand at 0.1% month-on-month in October, which represents a significant decline compared to 0.4% in September. The year-on-year figure is likely to decline from 3.7% to 3.3%. Core CPI is expected to remain at 4.1% YoY and increase 0.3% MoM, repeating last month’s increase.


We expect core CPI inflation to rise 0.3% month-on-month in October. The headline CPI was likely to remain stable due to lower energy prices.


Our forecasts for the October CPI suggest that core inflation accelerated for the third consecutive month: we forecast an increase of 0.36% month-on-month, above consensus, slightly up from 0.32% in September. We also expect a 0.10% increase for the headline index as inflation will benefit from the sharp drop in energy prices. We reported that the staple goods segment likely contributed to inflation, while housing price growth likely slowed. Please note that our unrounded CPI core inflation forecast could easily turn into a rounded 0.3% increase if some of our key assumptions for October are not met. Our month-on-month forecasts are at 3.3%/4.2% year-on-year for headline and underlying prices.


At first glance, US consumer prices for October appear to show a significant easing of price pressure. Indeed, it is likely that consumer prices have only risen 0.1% compared to September. The interannual rate would then fall from 3.7% to 3.3%. However, the main reason for this is that gasoline has become cheaper by around 5%. The more important underlying rate, which excludes volatility in energy and food prices, would likely be 0.3%, as in August and September. In general, there is a risk that the underlying rate tends even to 0.4%. In any case, the year-on-year rate will remain at 4.1% at best, and a decline in October seems highly unlikely. The report does not question the downward trend in inflation. However, I would remind us that this process is slow and bumpy. In our opinion, inflation will not fall back to 2%, but will stabilize around 3%.

Deutsche Bank

We expect headline inflation to be just +0.1% mom, due to falling energy prices. We believe core inflation will rise to +0.4% from +0.3% last month. If we are correct, the year-on-year rate will be 3.3% and 4.2%, respectively.


The energy component is likely to have had a negative impact on the overall index, which should translate into a 0.1% increase for overall prices. If we are correct, the year-on-year rate could fall from 3.7% to a four-month low of 3.3%. The advance in core prices could have been stronger, at 0.3%, which should allow core inflation to remain unchanged for 12 months at a two-year low of 4.1%.


The October CPI will show that core inflation remains just outside a range consistent with the target, standing at 0.3% month-on-month. Weakening energy prices will likely translate into a decline in headline inflation, which will be around 0.2% month-on-month. Inflation will continue to reflect a tug-of-war between firm price pressures in demand-sensitive categories, such as basic services without accommodation, and the relaxation of goods prices as a result of the normalization of supply chains. supply. The Fed will look for clues about the persistence of these two forces when assessing the appropriate degree of monetary tightening. Housing inflation will also be important, as it surprised in September and has remained somewhat more stable than expected this year.

Wells Fargo

Since the end of September, gas prices have continued to fall and food inflation appears to be moving sideways. This dynamic supports our forecast for the headline CPI to rise just 0.1% in October. If fulfilled, it would be the smallest monthly increase since May. However, this modest rise will likely be overshadowed by the continued strength of the core CPI, which we expect to rise 0.3% for the third consecutive month.

Source: Fx Street

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